State, feds open 3.5 million acres for oil leasing in Cook Inlet

Federal and state agencies have finalized plans to offer about 3.5 million acres of offshore leases in Alaska’s Lower Cook Inlet. The U.S. Bureau of Ocean Energy Management, or BOEM, issued its formal announcement Nov. 28 that it will auction off 958,202 acres of Outer Continental Shelf leases Dec. 30 in federal OCS Sale 258. BOEM published the Final Environmental Impact Statement for the sale on Oct. 22.

In its final announcement the agency removed acreage that was important as beluga whale habitat. Earlier, the state of Alaska reaffirmed its plan to offer 2.8 million areas of unleased state-owned submerged lands Cook Inlet in 721 tracts that are adjacent to 193 OCS blocks being offered.

“We are offering this special State Cook Inlet lease sale at the end of the year to coincide with the federal sale for the benefit of potential bidders,” DNR Deputy Commissioner John Crowther said. State officials are anxious to stimulate new exploration in the Cook Inlet region because reserves in existing natural gas fields are running down and the state’s major population areas, in Southcentral Alaska, mostly depend on gas for space heating and power generation. Results of the state sale, being done through on-line bidding starting Dec, 12, will be released Dec. 30 when the federal bidding results will also be known. OCS Sale 258 is in an area of the lower Inlet between Kalgin Island, in the north, and Augustine Island, in the south.

The state acreage is from the shore three miles seaward surrounds the federal OCS tracts, like a doughnut. All other unleased state submerged lands are also on offer, including those north of Kalgin Island. Upper Cook Inlet, north of Kalgin Island, is where there are currently- producing offshore oil and gas operations. Hilcorp Energy LLC operates producing platforms in the upper Inlet.

Alaska officials are hoping that the addition of state tracts will create a larger offering and attract more industry interest. BOEM had planned earlier for a lower Inlet OCS sale but cancelled it due to the apparent lack of interest from industry. However, Congress put the sale back on the table in its Inflation Reduction Act, instructing BOEM to hold the sale by Dec. 31.

State officials believe he addition of substantial state acreage in adjacent tracts could encourage more interest because companies will be able to bid across geologic trends that cross the state and federal boundaries. Conservation groups voiced concerns over the BOEM’s decision.

“Interior slightly decreased the amount of ocean habitat being auctioned off, but that can’t change the fact that more oil drilling means more harm to our climate and the Cook Inlet belugas, one of the world’s most endangered whale populations,” Kristen Monsell, senior attorney for the Denver-based Center for said Biological Diversity. “The noise pollution, vessel traffic and oil spills that will stem from new oil drilling won’t stay within prescribed boundaries, and belugas and other Cook Inlet species will pay the price.”

It’s unclear how much industry interest there will be. There has been a low turnout by bidders in both state and federal sales in recent years. In the most recent OCS Sale held several years ago there was only one bidder, Hilcorp Energy. In a state areawide sale held earlier this year only one company bid on tracts adjacent to producing gas field it owns. In the most recent state Cook Inlet areawide sale only one company, Furie Operating Alaska, submitted bids for tracts adjacent to a small offshore gas field it operates, Kitchen Lights, in upper Cook Inlet.